Heart of the World at greaterfool.ca 8 Jun 2011 9:31pm – “I was talking to a friend today, after a six months hiatus, and heard a great, amazing and very heartwarming story.
I was told that a woman I know who managed a film industry prop house in Vancouver had put her house on the market at 900 large. The house was really nothing much — near the Metrotown Mall in Burnaby, recently repainted but that was about it; a block away from a gas station in a mish-mash neighbourhood… the heartwarming part of this is that this woman is really lovely as a person, and as I remember her from various business dealings, I can tell you that her income was nothing much, and her work was hard, unrewarding, and she did it very, very well, with no complaints.
Anyway, there was a bidding war on her humble abode, and she and hubby came out of the affray with $1.5 mill. — a true lottery win! It is a good thing when those who work hard, and are kind and helpful to others receive this kind of windfall.
So while the economy at large will lose when prices revert to the mean, there have been, here and there, some good results for deserving people.”
Remember, however, that for every individual in this situation who is fortunate enough to ‘cash-out’ there is somebody taking the other side of the deal, and for that party the deal will be… what’s the opposite of ‘Heartwarming’?… ‘Soul Destroying’?
A speculator with a large down-payment or paying cash? Perhaps, and, if so, we’d have little sympathy. But, in our market, the buyers are just as likely to be a youngish family who have inappropriately completely overextended themselves into massive mortgage debt to ‘purchase’ this property, and they now carry very substantial risk that their lives will be ruined over the coming 5 – 10 years by being hopelessly overburdened by that debt.
Net gain/loss for the community?
There are very few real silver linings to speculative manias.
And, it goes without saying that people making more from the sales of their houses than a lifetime of savings, and having home sales described as ‘lottery wins’, are evidence of the fact of that mania.